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Pioneer spirit behind American stocks

The US stock market is larger than any other market in the world, and innovation and entrepreneurship make US companies special.

”The Land of Opportunity" and "The American Dream". There is still something special about US companies - and thus also about US stocks - despite the bruises and scratches in wake of the financial crisis and the emerging markets’ significant growth rates.  This is so because the USA can still do something with companies that other parts of the world are unable to match.
 
John William Olsen is chief portfolio manager at Danske Capital and the investment adviser for Danske Invest Global StockPicking.  He is looking for good investment opportunities in stock markets all over the world, and he is pointing towards a number of structural factors which are underpinning US companies’ success – among others the Pioneer spirit.
 
Innovation – a common denominator
 ”The US society is devoted to innovation and entrepreneurship. It is likely that the pioneer spirit still lives. The country was found by risk takers, and from the very beginning the country was the land of opportunity. The internet revolution is far from completed, and San Francisco remains the epicentre of innovation, explains John William Olsen.
 
Johan William Olsen is pointing at the large home market as a significant advantage for US companies which are capable of scaling their business models up and down.
 
Huge advantage
”It is obviously a huge advantage for companies with scalable business models that their home market is so large and relatively homogeneous. Imagine an internet-start-up in Denmark. Companies would start up addressing Denmark, then the Nordic countries and then possibly move on to other parts of the world. In the USA companies can start by addressing 300 million Americans thus having access to critical mass from day one. History has shown that the scale advantage is of decisive importance to the internet business model,” says John William Olsen.
 
The large home market, the high propensity to take risk and the entrepreneur spirit have according to John William Olsen resulted in many large companies which have been able to consolidate their position within industrial niches thus producing long-term winners. He is mentioning companies such as Colgate from 1806, Johnson Controls from 1885, Beckton, Dickinson & Co. from 1897 and Baker Hughes from 1909 – all companies which are currently held in the sub-fund Danske Invest Global StockPicking.
 
”Such a historical record and capability to survive and deliver continuous innovation is not something that you find in e.g. emerging markets," explains John William Olsen.

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